Minto council agreed to borrow $5,160,000 to put toward next year's spending during Tuesday’s council meeting.
Gordon Duff, township treasurer, presented the 2021 capital budget revisions and long-term borrowing report to council, which is set to affect the 2022 budget and tax increase.
“We have four main projects that are quite important. One had already started and that is the renovation and expansion of the Palmerston Recreation Centre,” said Duff.
“This is under the Investing in Canada Infrastructure Program (ICIP): Community, Culture and Recreation (CCR) stream which covers 83 percent of the cost, and the town has to pay the difference. We anticipated more of our share over a year ago which is $650,000 and it will be allocated to renovating dressing rooms and ball fields.”
The second project is Palmerston Sewage Treatment Plant Clarifier, which is a repair job and roughly $3 million is estimated to be the total project cost. Of that, $2.5 million will be borrowed and the remaining $400,000 will come from wastewater lifecycle capital reserves.
Thirdly, the 12th Line – mill and pave project has been underway for the past two years.
“The culvert has been replaced and urgent road repairs have been completed. The final step in this project is to complete the milling and paving of the section of the road which is being replaced,” said Duff.
“12th line’s estimated cost for work to be done in 2022 is $650,000. There is $150,000 in previously approved budget amounts and it is recommended that the remaining $500,000 be debentured over 10 years.”
Lastly, the water main repairs that need to be done at Royal Terrace Retirement home on White Road has been a costly project.
Although it is a joint project with the County of Wellington, the total estimated cost of this project is $3,700,000 with the County of Wellington’s share estimated at $1,745,000 and the Town of Minto’s share at $1,955,000.
The cost for the town would be financed by $445,000 from development charges, with the remaining $1.5 million o be borrowed. The road work of $575,000 would be vouched over 10 years with the water and wastewater components of $580,000 and $355,000 to be debentured over a 20-year term.
Coun. David Anderson was a little skeptical of borrowing more money and asked about the effects of long-term borrowing on interest rates for the retirement home project.
“If we borrow more money and our interest rates go up, do they have an agreement that they’re interest rates also go up?”
Duff explained the town is revenue-neutral, which means the interest rates are fixed for 30 years.
“What happens is that we do semi-annual payments, so when the payment is due, they send us the money, the principal and interest: $25,000 every six months plus interest. We neither profit nor loss,” said Duff.
When asked about how much interest rates are set to increase for 2022, Duff explains rates are set to be higher regardless of how much borrowing and budget changes happen during the year.
He noted that if council locks in the interest rate for long-term borrowing then the rates will not change, but he would need to do more reporting to figure out exactly how much taxes will increase for Minto residents in 2022.
“This will not affect the 2021 tax increase for Minto residents, but we have to consider the financing cost in the 2022 budget,” he explains.
“Annual repayments are estimated at approximately $120,000 for tax-supported roads projects, $185,000 for wastewater projects and $23,000 for water projects. We haven’t secured the terms yet.”
